The demonstration at the Consumer Electronics Show here amounted to an early signal from the Redmond, Wash., company that it is doing more to make its flagship Windows operating system better suited to new devices like tablets.
Microsoft executives showed Windows running on processors designed by ARM Holdings PLC, a company whose chip designs are common in everything from mobile phones to the iPad to television set-top boxes.
Microsoft gave the demonstration hours before its chief executive officer, Steve Ballmer, was scheduled to kick off CES with a keynote speech focusing on the company's progress in consumer markets with products including its Kinect hands-free game controller.
ARM chips, manufactured by companies including Nvidia Corp., Qualcomm Inc. and Texas Instruments Inc., consume less power than traditional PC microprocessors, and they're essential for battery-powered devices including tablets. Microsoft also said the next version of Windows will run on new miniature chip designs from traditional PC chip makers Intel Corp. and Advanced Micro Devices Inc.
Bob O'Donnell, an analyst at the research firm IDC, said Microsoft is in danger of falling too far behind competitors and "is trying to stem this concern that they're not relevant in the tablet computer market."
By some analysts' estimates, Apple sold as many as 14 million iPads last year. New tablets running Google Inc.'s Android software, such as Samsung's Galaxy Tab, are also starting to hit the market in sizable numbers, including a wave of new devices being shown at this week's CES. Some analysts predict that world-wide sales of tablets could jump to as many as 50 million units in 2011.
Microsoft is also being pressured to respond more aggressively to tablets because of early signs from retailers and PC companies that tablets are eating into traditional PC sales, especially low-end laptop computers known as netbooks.
But Microsoft's CES demonstration left many questions about the company's strategy unanswered. Steven Sinofsky, president of Microsoft's Windows division, made it clear that the software running on ARM processors didn't include the user interface people will see on the next version of Windows.
Analysts said Microsoft needs to do much more to make the Windows interface better suited to touch-screen devices such as tablets. The current version of the operating system, Windows 7, remains too dependent on traditional PC accessories including keyboards and mice to work well on tablets, analysts said.
Microsoft also didn't show the new ARM-version of Windows running on finished hardware during its demonstration. It said applications that run on current versions of Windows, based on the traditional x86 PC chip design, won't run on the ARM-based versions of Windows.
Mr. Sinofsky declined to say when the new version of Windows will be available. He reiterated that there is a two- to three-year development cycle on which the company has said it plans to release new operating-system installments. The current version of the software, Windows 7, came out in October 2009, which suggests a new version could be released late this year or next year.
"I don't think it's that long away," Mr. Sinofsky said of the next version of Windows.
At CES, Microsoft also showed a new version of Surface, a large touch-screen device intended to provide Internet access and other services in hotel lobbies, banks and other public places. The original version of Surface was the size of a big coffee table, while the new version is only four-inches thick thanks to new miniature components.
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